The Weakest Links: GDP and the chain of debt
3D Shackled Credit
Credit- StockMonkeys.com

 The latest Office for National Statistics figures show the British economy is out of recession – albeit briefly – after growth in the third quarter was confirmed at 1%.

 In its second estimate for gross domestic product (GDP) growth between the second and third quarters, the ONS makes no change to the headline figure.

 However, drilling down into the individual industries reveals a certain degree of turbulence, with some sectors still seeing substantial falls in activity.

 Construction fares even worse in the second estimate than in the first, with its ‘growth’ revised downwards from -2.5% to -2.6%.

 Production output growth is revised down from 1.1% to 0.9%, while manufacturing growth falls to 0.9% from 1.0%.

 In many supply chains, however, it may not be the availability of work that is the determining factor dominating company cashflows at present, but the settlement of debts.

For companies that have accumulated substantial debts during the recession, settling invoices promptly as the economy returns to growth could still present significant cashflow problems.

 Meanwhile, for creditors, late payments mean funds that rightfully belong to them are locked away in the accounts of other companies.

 This in turn prevents those funds from being used for purchases further up the supply chain, to cover expansion costs or to invest in innovation.

 In general, better circulation of funds is better for the economy as a whole – and getting payments back on track will be a key link in the chain towards a healthier UK GDP.

 We can help you to chase payments – and we can also take over your ongoing credit control process if you need to streamline your procedures and make your invoicing more efficient and effective overall.

 Together, efforts to recover outstanding debts and an ongoing focus on effective invoicing can ensure your customers pay you more promptly, with broad benefits for your supply chain, industry and the wider economy.

 

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